Do caps on damages work to reduce health costs?

Whether imposing a cap on the amount of money a plaintiff can recover in a medical malpractice case has an effect on health care costs, the cost of malpractice insurance and the practice of medicine is one of those debates that never end. (For a great little book on this debate go here.) Adding fuel to the fire, the TortBurger blog is reporting today on a a new story on dallasnews.com which discusses new evidence that malpractice damage caps are not a fix for high health care costs. Texas passed a medical malpractice lawsuit cap in 2003, limiting the amount of general damages (non-economic damages such as pain and suffering, loss of enjoyment of life, and mental anguish) to $250,000, no matter how egregious the harm done to the patient. According to the article, the law produced a 30 percent drop in doctors’ mapractice insurance premiums. However that has not translated into lower medical costs for consumers. The cost of medical insurance premiums rose faster than earnings in Texas. A study published in December 2008 in the journal Health Sciences Review, found that “(t)ort reforms have not led to health care cost savings for consumers.” The study asks the question “(a)re there other benefits (from tort reform) to consumers? If these cannot be identified, it is difficult to see a justification for the loss of legal rights.” The Blog's comment concludes that "the benefits [of imposing caps] acrue to the insurance companies who do not have to pay for the damages covered under their policies. Those hurt are not people who have small injuries and heal up from the malpractice done to them. Those who are damaged by the cap are the severally injured, who then become a burden on society, because the person who caused their injury is not having to pay for the damage they have done."